Members of the Pontiac City Council discussed several options for setting the 2012 tax levy at Monday night’s meeting.

City Administrator Bob Karls stated the equalized assessed value of property within city limits is nearly $119 million, down about $4 million from the 2011 EAV of $122 million. The city council has to decide if it will increase its levy, which will lead to a rate increase, or use last year’s rate and bring in less money. The levy, or extension, is the amount of money collected through property taxes.

The EAV is set by the county assessor and the taxing body determines its levy (extension), and those two figures will then decide the rate. The EAV is divided by 100 and then multiplied by a governing body’s tax rate to arrive at the extension amount, Karls said.

The rate, which is how much a property tax owner will pay per $100 of their property’s equalized assessed value, is decided after the EAV and extension amounts have been set.

The city is operating under PTELL tax cap limitations, which means the extension can be increased by the rate of inflation, set this year at 3 percent, or a maximum of 5 percent, whichever is lower.

If the city uses the 3 percent increase, the levy would be $2.5 million, resulting in an additional $91,443, which would result in a rate of $2.10.

If the city uses last year’s rate of $1.98, the extension would generate $2.35 million, about $54,000 less than last year.

The city could also set the extension somewhere between the lowest $2.35 million and the highest $2.5 million.

And while overall EAV has gone down, each individual property has its own EAV, which may have increased or may have gone down and would affect whether the owner pays higher taxes.

Councilman Brian Gabor said the housing market has been hurting the past few years and EAV usually lags three to four years behind, “but now it’s caught up,” he said. “I think it’s ironic that we were just talking about rebating property taxes (that was coupled with the sales tax increase referendum which failed) and now we are talking about a higher rate. I am not going to be in favor of that,” he said.

Councilman Mason Hall said, based on his calculations, that an owner of a $100,000 home, with an EAV of $33,333 (one-third of market value), would have paid $659 with this year’s rate of $1.98, while if the city keeps the same rate this year, the cost would be $679, and if using the rate increase of $2.10, the taxes would be $699, barring any exemptions.

Karls noted the biggest problem is that police and firemen pension costs, which are set by the state, and the city’s liability insurance, combined are expected to increase by $100,000 next year. The 2012 levy is payable in 2013.

Page 2 of 2 - “Ten years ago, these two amounts made up about 43 percent of the general fund expenditures, in 2011, they make up two-thirds of the fund,” Karls said.

Since 1998, the city’s tax rate has increased 9 cents.

Both Karls and City Attorney Alan Schrock noted that unlike other government entities, the city did not max out its extension amounts right before PTELL kicked in, which would have given the city a larger base amount.

The 2011 extension amounts, rounded out, for city funds included the following:

• Other miscellaneous funds total $253,191. These funds include, Pontiac Public Library, ($170,000), library building ($23,000), public benefit ($1,000), audit (($15,000), municipal band ($44,000), and sewage ($500). Karls noted that the sewer fees pay for a majority of that department’s costs.